Financial Report 財務報告

Transcription

1 Financial Report

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3 Contents 2 REPORT OF MEMBERS OF COUNCIL 4 INDEPENDENT AUDITORS REPORT 5 BALANCE SHEET 6 INCOME AND EXPENDITURE ACCOUNT 7 STATEMENT OF CHANGES IN FUNDS 8 CASH FLOW STATEMENT 9 NOTES ON THE FINANCIAL STATEMENTS 1

4 Report of Members of Council The Council has pleasure in submitting to the members the annual report and financial statements for the year ended 28th February, PRINCIPAL ACTIVITIES The principal activities of the Association are the promotion of the welfare and the protection of the lawful interests of the medical profession. ACCOUNTS The results and the movements of the designated funds of the Association for the year ended 28th February, 2009 and the state of the Association s affairs at that date are set out in the financial statements on pages 5 to 24. PROPERTY, PLANT AND EQUIPMENT Movements in property, plant and equipment during the year are set out in note (5) on the financial statements. DONATIONS Charitable donations made by the Association during the year amounted to 10,000. MEMBERS OF THE COUNCIL The following members served on the Council during the financial year and up to the date of this report: Dr. Chan Hau Ngai, Kingsley (Appointed on 17th July, 2008) Dr. Chan Kit Sheung (Appointed on 17th July, 2008) Dr. Chan Man Kam Dr. Chan Yee Shing, Alvin Dr. Cheng Chi Man Dr. Cheung Hon Ming Dr. Chiu Shing Ping, James Dr. Choi Kin, Gabriel Dr. Chow Chun Kwan, John Dr. Chow Pak Chin Dr. Chu Kin Wah Dr. Fung Yee Leung, Wilson Dr. Ho Chung Ping Dr. Ho Hung Kwong, Duncan Dr. Hui Ka Wah, Ronnie Dr. Kwok Ka Ki (Resigned on 2nd October, 2008) Dr. Lam Tzit Yuen, David Dr. Leung Chi Chiu Dr. Leung Ka Lau (Appointed on 2nd October, 2008) Dr. Li Siu Lung, Steven Dr. Li Sum Wo Dr. Lo Chi Fung, Ernie (Appointed on 17th July, 2008) Dr. Tse Hung Hing Dr. Wong Bun Lap, Bernard Dr. Yeung Chiu Fat, Henry Dr. Yu, Cissy 2

5 Report of Members of Council ATTENDANCE AT COUNCIL MEETINGS Since the last annual general meeting held on 17th July, 2008, 11 regular meetings of the Council had been held and the attendance of council members at these meetings was as follows: Regular Council meeting Dr. Chan Hau Ngai, Kingsley 9 Dr. Chan Kit Sheung 11 Dr. Chan Man Kam 10 Dr. Chan Yee Shing, Alvin 11 Dr. Cheng Chi Man 10 Dr. Cheung Hon Ming 11 Dr. Chiu Shing Ping, James 9 Dr. Choi Kin, Gabriel 10 Dr. Chow Chun Kwan 10 Dr. Chow Pak Chin 10 Dr. Chu Kin Wah 3 Dr. Fung Yee Leung, Wilson 6 Dr. Ho Chung Ping 7 Regular Council meeting Dr. Ho Hung Kwong, Duncan 4 Dr. Hui Ka Wah, Ronnie 7 Dr. Kwok Ka Ki 2 Dr. Lam Tzit Yuen 10 Dr. Leung Chi Chiu 11 Dr. Leung Ka Lau 7 Dr. Li Siu Lung, Steven 1 Dr. Li Sum Wo 9 Dr. Lo Chi Fung, Ernie 10 Dr. Tse Hung Hing 11 Dr. Wong Bun Lap, Bernard 6 Dr. Yeung Chiu Fat, Henry 9 Dr. Yu, Cissy 10 COUNCIL MEMBERS INTEREST IN CONTRACTS No contracts of significance to which the Association was a party and in which a Council member of the Association had a material interest subsisted at the end of the year or at any time during the year. At no time during the year was the Association a party to any arrangements to enable the Council members of the Association to acquire benefits by means of the acquisition of debentures of the Association or shares in or debentures of any other body corporate. MEMBERSHIP During the year, a total of 1 life members, 96 regular members, 98 student members, 19 associate members and 1 fraternity member joined the Association. As at 28th February 2009, the total number of members was 8,047, of which 6,273 are regular members, 521 newly qualified members, 410 life members, 2 honorary members, 442 student members, 241 absent members, 138 associate members and 20 fraternity members. HONORARY AUDITORS The financial statements have been audited by Li, Tang, Chen & Co., who retire but, being eligible, offer themselves for reappointment. On behalf of the Council Dr. TSE Hung Hing President Hong Kong, 4th June,

6 Independent Auditors Report TO THE MEMBERS OF THE HONG KONG MEDICAL ASSOCIATION (incorporated in Hong Kong with limited liability) We have audited the financial statements of The Hong Kong Medical Association set out on pages 5 to 24, which comprise the balance sheet as at 28th February, 2009, and the income and expenditure account, the statement of changes in funds and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory notes. COUNCIL MEMBERS RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS The council members are responsible for the preparation and the true and fair presentation of these financial statements in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants and the Hong Kong Companies Ordinance. This responsibility includes designing, implementing and maintaining internal control relevant to the preparation and the true and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. AUDITORS RESPONSIBILITY Our responsibility is to express an opinion on these financial statements based on our audit and to report our opinion solely to you, as a body, in accordance with section 141 of the Hong Kong Companies Ordinance, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certified Public Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity s preparation and true and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the council members, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. OPINION In our opinion, the financial statements give a true and fair view of the state of the Association s affairs as at 28th February, 2009 and of its surplus and cash flows for the year then ended in accordance with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the Hong Kong Companies Ordinance. Li, Tang, Chen & Co. Certified Public Accountants (Practising) Honorary Auditors Hong Kong, 4th June,

7 Balance Sheet as at 28th February, 2009 Note NON-CURRENT ASSETS Property, plant and equipment 5 10,376,383 10,915,774 Investment properties 6 83,063 83,163 Prepaid lease payments on land use rights 7 138, ,175 Available-for-sale fi nancial assets 8 9,077,294 13,961,623 Held-to-maturity securities 9 1,404,360 1,404,360 21,079,629 26,507,095 CURRENT ASSETS Inventories 2(f) 89,969 70,787 Prepaid lease payments on land use rights 7 3,645 3,645 Utility and other deposits 98,962 95,861 Sundry receivables and prepayments 375, ,483 Tax recoverable 23(iii) 110,961 Amounts due from related companies Hong Kong Medical Association Organ Donation Register Fund Limited 10 97,280 Hong Kong Medical Association Charitable Foundation Limited Cash and bank balances 12 41,808,669 40,200,569 42,487,608 41,182,727 CURRENT LIABILITIES Amounts due to related companies Hong Kong Medical Association Organ Donation Register Fund Limited 10 95,022 Hong Kong Medical Association Charitable Foundation Limited 11 21,102 Tax payable 57,798 Sundry payables and accruals 20,589,269 20,113,530 20,705,393 20,171,328 NET CURRENT ASSETS 21,782,215 21,011,399 NET ASSETS 42,861,844 47,518,494 FUNDS General Fund 24 14,555,860 14,555,860 Special Fund 24 16,469,746 14,844,732 Permanent Premises Fund 24 4,224,653 4,224,653 Public Medical Education Foundation Fund , ,964 HKMA China Relief Fund 24 63, ,677 New Premises Fund 24 6,281,573 6,281,573 Investment Revaluation Reserve 24 1,023,280 7,159,035 42,861,844 47,518,494 The fi nancial statements on pages 5 to 24 were approved and authorised for issue by the Council on 4th June, Dr. TSE Hung Hing President Dr. LEUNG Chi Chiu Hon. Treasurer 5

8 Income and Expenditure Account for the year ended 28th February, 2009 Note MEMBERSHIP AND SUBSCRIPTION FEES 13 61, ,760 OTHER REVENUES 13 11,637,976 12,984,645 ADMINISTRATIVE AND OTHER OPERATING EXPENSES 18 (9,995,483) (9,419,209) SURPLUS FOR THE YEAR BEFORE TAXATION 1,704,293 3,667,196 TAXATION 23 (79,279) (304,378) SURPLUS AFTER TAXATION 1,625,014 3,362,818 TRANSFER FROM SPECIAL FUND FOR SUBSCRIPTIONS RECEIVABLE WAIVED FOR 2008/09 2,629,500 2,476,860 NET SURPLUS FOR THE YEAR TRANSFERRED TO GENERAL FUND 24 4,254,514 5,839,678 6

9 Statement of Changes in Funds for the year ended 28th February, 2009 Note Total funds at beginning of year 47,518,494 45,474,634 General fund surplus for the year from income and expenditure account 1,625,014 3,362,818 Revaluation reserve revaluation defi cit for the year 24 (6,135,755) (1,286,812) release upon disposal (46,305) (6,135,755) (1,333,117) Other funds interest income 24 1,275 14,159 donation expenses 24 (70,000) expense on Healthy 8000 steps 24 (77,184) (145,909) 14,159 Total funds at end of year 42,861,844 47,518,494 7

10 Cash Flow Statement for the year ended 28th February, 2009 (restated) CASH FROM OPERATING ACTIVITIES Surplus for the year before taxation General Fund 1,704,293 3,667,196 (Defi cit)/surplus for the year Public Medical Education Foundation Fund (76,357) 10,351 HKMA China Relief Fund (69,552) 3,808 Adjustment for: Profi t on disposal of available-for-sale fi nancial assets (69,456) Interest income (667,940) (1,650,427) Depreciation and amortization expenses 608, ,577 Loss on property, plant and equipment written off 24,398 Dividend income (671,827) (598,668) (Increase)/decrease in Inventories (19,182) 17,020 Utility and other deposits (3,100) (10,000) Amounts due from related companies 97,382 86,119 Sundry receivables and prepayments 339,081 (59,659) Increase/(decrease) in Amounts due to related companies 116,124 Sundry payables and accruals 475,739 4,356,985 Cash generated from operations 1,832,927 6,380,244 Hong Kong profi ts tax paid (248,038) (308) NET CASH FROM OPERATING ACTIVITIES 1,584,889 6,379,936 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of available-for-sale fi nancial assets (579,600) 2,569,458 Payments to acquire property, plant and equipment (65,129) (111,221) Interest received 667,940 1,650,427 Increase in time deposit beyond 3 months of maturity at acquisition (94,666) (3,185,590) NET CASH (USED IN)/FROM INVESTING ACTIVITIES (71,455) 923,074 NET INCREASE IN CASH AND CASH EQUIVALENTS 1,513,434 7,303,010 CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 37,014,979 29,711,969 CASH AND CASH EQUIVALENTS AT END OF YEAR 38,528,413 37,014,979 ANALYSIS OF THE BALANCES OF CASH AND CASH EQUIVALENTS Time deposits at banks 30,167,847 29,728,900 Cash and bank balances 8,360,566 7,286,079 38,528,413 37,014,979 8

11 1. STATUS OF THE ASSOCIATION The Association was incorporated in Hong Kong on 15th June, 1960 as a company limited by guarantee incorporated in Hong Kong. Every member of the Association undertakes to contribute, if required, an amount not exceeding 20, to the assets of the Association in the event of its being wound up. The address of the Association s registered offi ce is 5/F., Duke of Windsor Social Service Building, 15 Hennessy Road, Hong Kong. The Association is engaged in the promotion of the welfare and the protection of the lawful interests of the medical profession. The fi nancial statements are presented in Hong Kong dollars which is the same as the functional currency of the Association. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these fi nancial statements are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. a) Basis of preparation: These fi nancial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards (which includes all applicable Hong Kong Accounting Standards) issued by the Hong Kong Institute of Certifi ed Public Accountants, accounting principles generally accepted in Hong Kong and the Hong Kong Companies Ordinance. They have been prepared under historical cost convention, except for available-for-sale fi nancial assets, which have been measured at fair value. In the opinion of the Council members, certain lease payments of the land situated in Hong Kong of the Association cannot be allocated reliably between the land and buildings element, therefore, the entire lease payments of those land are included in the cost of land and buildings and are amortised over the lease terms. b) Foreign currency translation: i) Functional and presentation currency Items included in the fi nancial statements are measured using the currency of the primary economic environment in which the Association operates ( the functional currency ). The fi nancial statements are presented in HK dollars, which is the Association s functional and presentation currency. ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income and expenditure account. c) Property, plant and equipment: Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. The cost of an asset comprises its purchase price and any directly attributable costs of bringing the asset to its working condition and location for its intended use. Expenditure incurred after the property, plant and equipment have been put into operation, such as repairs and maintenance, is normally charged to the income and expenditure account in the period in which it is incurred. In situations where it can be clearly demonstrated that the expenditure has resulted in an increase in the future economic benefi ts expected to be obtained from the use of the property, plant and equipment, the expenditure is capitalized as an additional cost of that asset. 9

12 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) c) Property, plant and equipment: (continued) Depreciation on property, plant and equipment is calculated on the straight-line basis to write of the cost over their estimated useful lives and after taking into account their estimated residue values, where appropriate, as follows: Leasehold land and building/building Furniture and fi xtures Computer equipment over the remaining unexpired terms of the leases 10% per annum 10% per annum The assets residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. d) Investment properties: Investment properties, which are properties held to earn rentals, is stated at cost less accumulated depreciation and any accumulated impairment losses. Depreciation is provided to write off the cost of investment properties using the straight-line method over the remaining terms of the leases. e) Impairment of assets: At each balance sheet date, an assessment is made of whether there is any indication of impairment of any asset, or whether there is any indication that an impairment loss previously recognised for an asset in prior years may no longer exist or may have decreased. If any such indication exists, the asset s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cashgenerating unit exceeds its recoverable amount. A previously recognised impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount for the asset, however not to an amount higher than the carrying amount that would have been determined (net of any depreciation), had no impairment loss been recognised in prior years. f) Inventories: Inventories, represent publications, souvenir and beverage held for sale, are stated at the lower of cost and net realisable value. Cost, which comprises all cost of purchase and, where applicable, costs of conversion and other costs that have incurred in bringing the inventories to their present location and condition, is calculated on the fi rst in fi rst out basis. Net realisable value is determined on the basis of anticipated sales proceeds less estimated selling expenses. g) Receivables: Receivables are initially measured at fair value and, after initial recognition, at amortised cost less impairment losses for bad and doubtful debts, if any, except for the short-term receivables with no stated interest rate and the effect of discounting being immaterial, that are measured at their original invoice amount less impairment losses for bad and doubtful debt, if any. At each balance sheet date, the Association assesses whether there is any objective evidence that a receivable or group of receivables is impaired. Impairment losses on trade and other receivables are recognised in profi t or loss when there is objective evidence that an impairment loss has been incurred and are measured as the difference between the receivables carrying amount and the present value of estimated future cash fl ows (excluding future credit losses that have not been incurred) discounted at its original effective interest rate, i.e. the effective interest rate computed at initial recognition. 10

13 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) h) Payables: Payables are initially measured at fair value and, after initial recognition, at amortised cost, except for shortterm payables with no stated interest rate and the effect of discounting being immaterial, that are measured at their original invoice amount. i) Cash and cash equivalents: For the purpose of the cash fl ow statement, cash and cash equivalents comprise cash on hand and demand deposits, and short term highly liquid investments which are readily convertible into known amounts of cash and which are subject to an insignifi cant risk of changes in value, and have a short maturity of generally within three months when acquired, less bank overdrafts which are repayable on demand and form an integral part of the Association s cash management. j) Interest on time deposits: Interest on time deposits of designated funds is credited directly to the respective funds. k) Designated donations/contributions and related expenditures: Designated donations/contributions received are credited directly to the respective funds. Expenditures are charged to these funds where appropriate. l) Deferred income tax: Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the fi nancial statements. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are recognized to the extent that it is probable that future taxable profi t will be available against which the temporary differences can be utilized. m) Available-for-sale financial assets: Investments are classifi ed as available-for-sale are measured at subsequent reporting dates at fair value except those investments which do not have a quoted market price in an active market and whose fair value cannot be reliably measured, gains and losses arising from changes in fair value are recognized directly in Investment Revaluation Reserve. Investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are stated at cost less any accumulated impairment losses. n) Held-to-maturity securities: Dated debt securities that the Association has the ability and intention to hold to maturity are classifi ed as heldto-maturity securities. Held-to-maturity securities are stated in the balance sheet at amortized cost less any identifi ed impairment loss. Provisions are made when carrying amounts are not expected to be fully recovered and are recognised as an expense in the income and expenditure account, such provisions being determined for each investment individually. 11

14 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) o) Operating leases: Leases in which a signifi cant portion of the risks and rewards of ownership are retained by the lessor are classifi ed as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged or credited to the income and expenditure account on a straight-line basis over the period of the lease. p) Revenue recognition: i) Entrance fees are recognised in the fi nancial year of receipt. ii) iii) iv) Membership and subscription fees are recognised on an accrual basis. Admission fees income are recognised when the related functions are performed. Donation income is recognised on a cash received basis. v) Advertisement income is recognised when the related advertisements have been published. vi) vii) viii) ix) Sales of wine, beverages, food and souvenirs are recognised when the delivery is made and cash is received. Retention fees on sales of food are recognised when related sales are recognised. Rental income is recognised in the year on a straight-line basis over the lease terms. Dividend received from listed investments is recognised when the right to receive payment is established. x) Commission income is recognised in the year in which the services are rendered. xi) Interest income is recognised as it accrues using the effective interest method. q) Related parties: For the purposes of these fi nancial statements, parties are considered to be related to the Association if the Association has the ability, directly or indirectly, to control the party or exercise signifi cant infl uence over the party in making fi nancial and operating decisions, or vice versa, or where the Association and the party are subject to common control or common signifi cant infl uence. Related parties may be individuals (being members of key management personnel and/or their close family members) or other entities and include entities which are under the signifi cant infl uence of related parties of the Association where those parties are individuals, and post-employment benefi t plans which are for the benefi t of employees of the Association or of any entity that is a related party of the Association. r) Employee benefits: i) Salaries, annual leave and other costs of non-monetary benefi ts are accrued and recognized as an expense in the year in which the associated services are rendered by employees of the Association. ii) The Association s contributions to the mandatory provident fund scheme and the defi ned contribution retirement scheme are expensed as incurred. Contributions to the defi ned contribution retirement scheme are reduced by contributions forfeited by those employees who leave the scheme prior to vesting fully in the contributions. The assets of both schemes are held separately from those of the Association in independently administered funds. 12

15 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) s) Provisions: A provision is recognised when a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outfl ow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. When the effect of discounting is material, the amount recognized for a provision is the present value at the balance sheet date of the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising from the passage of time is included in fi nance costs in the income and expenditure account. 3. CHANGES IN ACCOUNTING POLICIES In current year, the Association has applied, for the fi rst time, the following amendments and new interpretations ( new HKFRSs ) issued by the HKICPA, which are effective for the Association during the year: HKAS 39 & HKFRS 7(Amendments) HK(IFRIC)-Int 11 HK(IFRIC)-Int 12 HK(IFRIC)-Int 14 Reclassifi cation of Financial Assets HKFRS 2 Group and Treasury Share Transactions Service Concession Arrangements HKAS 19 The Limit on a Defi ned Benefi t Asset, Minimum Funding Requirements and their Interaction The adoption of new HKFRSs has no material effect on the results or fi nancial position of the Association for the current or prior accounting periods. Accordingly, no prior period adjustment has been recognised. 4. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Association makes estimates and assumptions concerning the future. The resulting accounting estimates will, by defi nition, seldom equal the related actual results. The estimates and assumptions that have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are discussed below. Useful lives of property, plant and equipment The Association s management determines the estimated useful lives and related depreciation charges for its property, plant and equipment. This estimate is based on the historical experience of the actual useful lives of property, plant and equipment of similar nature and functions. It could change signifi cantly as a result of technical innovations and competitor actions in response to severe industry cycles. Management will increase the depreciation charge where useful lives are less than previously estimated lives, or it will write-off or write-down technically obsolete or non-strategic assets that have been abandoned or sold. 13

16 5. PROPERTY, PLANT AND EQUIPMENT Leasehold land and building Building Furniture Computer (Note 1) (Note 2) and fixtures equipment Total Cost: At ,554, ,790 5,230, ,409 14,877,104 Additions 57,761 53, ,221 Disposals (57,152) (57,152) At and ,554, ,790 5,288, ,717 14,931,173 Additions 11,741 53,388 65,129 At ,554, ,790 5,300, ,105 14,996,302 Accumulated depreciation: At , ,326 2,527, ,319 3,449,322 Charge for the year 9,007 10, ,859 50, ,831 Written back on disposals (32,754) (32,754) At and , ,247 3,056, ,609 4,015,399 Charge for the year 9,007 10, ,033 54, ,520 At , ,168 3,586, ,168 4,619,919 Net book value At ,004, ,622 1,714, ,937 10,376,383 At ,013, ,543 2,232, ,108 10,915,774 (1) The leasehold land and building is held in Hong Kong on long lease and is located at 2nd Floor, The Chinese Club Building, Nos. 21 & 22 Connaught Road Central, Hong Kong. (2) The building is situated in Hong Kong at 5th Floor, Duke of Windsor Building, 15 Hennessy Road, Hong Kong. 6. INVESTMENT PROPERTY Investment property (Note 1) Cost: At and at ,463 Accumulated depreciation: Balance at Charge for the year 100 Balance at Net book value At ,063 At ,163 (1) The investment property is held in Hong Kong on long lease and is located at Flat 1, 6th Floor, Wyndham Mansion, 32 Wyndham Street, Hong Kong. The investment property is leased to third parties on operating leases. The fair value of the property at 28th February, 2009 assessed by the Council members is approximately 6.5 million (2008: 5.3 million). 14

17 7. PREPAID LEASE PAYMENTS ON LAND USE RIGHTS The Association s prepaid lease payments on land use rights comprise: Situated in Hong Kong Medium-term lease 142, ,820 Analysed for reporting purposes as: Non-current assets 138, ,175 Current assets 3,645 3, , , AVAILABLE-FOR-SALE FINANCIAL ASSETS Equity securities, at market value Listed in Hong Kong 6,113,111 10,986,356 Capital Guaranteed Fund, at market value 2,964,183 2,975,267 9,077,294 13,961, HELD-TO-MATURITY SECURITIES Held-to-maturity securities, at amortized cost due after one year unlisted 1,404,360 1,404, AMOUNT DUE (TO)/FROM THE HONG KONG MEDICAL ASSOCIATION ORGAN DONATION REGISTER FUND LIMITED Balance at beginning of year 97,280 64,372 Donation received on behalf (3,626) (4,204) Amount reimburse to HKMA (203,770) (110,116) 60,168 Add: Expenses paid on behalf Maintenance expenses 12,604 12,608 Postage expenses 1,347 6,690 Printing expenses 15,480 Sundries Telephone/data expenses 1,038 1,324 15,094 37,112 Balance at end of year (95,022) 97,280 15

18 11. AMOUNT DUE (TO)/FROM THE HONG KONG MEDICAL ASSOCIATION CHARITABLE FOUNDATION LIMITED Balance at beginning of year ,129 Donation received on behalf and advertising fee deposit (30,000) (13,000) Reimbursement to The Hong Kong Medical Association (11,282) (188,592) (41,282) (201,592) (41,180) (82,463) Add: Expenses paid on behalf Postage expenses 3, Mailing expenses 673 Stationery expenses 80 Filing fee 105 Concert expenses 15,683 82,342 20,077 82,565 Balance as at end of year (21,103) CASH AND BANK BALANCES Time deposits at bank 33,448,103 32,914,490 Cash and bank balances 8,360,566 7,286,079 41,808,669 40,200,569 Cash and bank balances include the following amounts denominated in a currency other than the Association s functional currency, HK dollars: United States dollars US$677,148 US$626,742 Cash at banks earn interest at fl oating rates based on daily bank deposit rates. Short term deposits are made for varying periods of no more than three months depending on the immediate cash requirements of the Association, and earn interest at the respective short term time deposit rates. 16

19 13. MEMBERSHIP AND SUBSCRIPTION FEES AND OTHER REVENUES The Association is engaged in the promotion of the welfare and the protection of the lawful interests of the medical profession. Revenues recognised during the year were as follows: Membership and subscription fees: Entrance fees 8,400 14,000 Annual subscriptions 37,400 72,650 Student membership subscriptions 7,110 Life membership subscriptions 16,000 8,000 61, ,760 Other revenues: Operating lease rental from investment property 67, ,000 Dividends received from listed investments 671, ,668 Gain on disposal of available-for-sale fi nancial assets 69,456 Commission received 7,392,541 7,569,914 Interest income banks 667,940 1,650,427 guaranteed coupon fund 169, ,395 Recovery of subscription fees previously written off 1,000 4,200 Surplus from annual social functions note 14 38,087 Surplus from club house note 15 1,482,891 1,491,141 Net income from mailing service secretarial charges note , ,892 Surplus on CME Programme for non-specialists note , ,372 Sundry income 8,386 14,035 Surplus on HKMA Newsletter note , ,042 Surplus on Health Education income/community Network 9,164 10,016 Subsidy from Professional Services Development Assistance Scheme 36,648 11,637,976 12,984, (DEFICIT)/SURPLUS FROM ANNUAL SOCIAL FUNCTIONS Income Admission fees received 382, ,400 Income from circular 60,000 30,000 Sponsorship for lecture Cash sponsorship 1,000 4,000 Advertisement income 60, , , ,400 Less: Expenditure (541,358) (642,313) (38,350) 38,087 17

20 15. SURPLUS FROM CLUB HOUSE Sales of food and beverages 111, ,484 Less: Cost of sales (12,718) (11,331) 98, ,153 Retention fees 1,127,237 1,189,377 Room and mahjong rental 291, ,620 1,517,474 1,529,150 Less: Visa card handling charges and coupon used (34,584) (38,009) 1,482,890 1,491, NET INCOME FROM MAILING SERVICE SECRETARIAL CHARGES Management fee 240, ,200 Secretarial charges 11,506 2,800 Handling charges 523, ,842 Staff OT pay 25,800 Production of health care laser booklet 60,200 Commission for MPG Publication 6, , ,295 Less: Handling fee (152,984) (146,403) 707, , SURPLUS ON CME PROGRAMME FOR NON-SPECIALISTS Fees and sponsorship received 152, ,176 Less: Expenditure (34,801) (119,804) 117, ,372 18

21 18. ADMINISTRATIVE AND OTHER OPERATING EXPENSES Advertising, newspaper and periodicals 43,037 18,059 Amortisation 3,646 3,646 Awards to medical students 10,000 10,000 Cash coupons to life members 80,300 67,100 Cleaning expenses 18,740 13,648 Club house expenses 297, ,423 Computer expenses 90,924 94,495 Community networks 800 9,850 Conference expenses 38,506 39,851 Contribution to staff retirement fund 697, ,244 Defi cit from annual social functions note 14 38,350 Defi cit from other functions note , ,313 Defi cit on sale of Hong Kong Medical Journal expenses 135, ,273 Delegation to/from CMA 16,941 6,960 Depreciation on property, plant and equipment 604, ,831 Depreciation on investment property Donations 10,000 10,000 Gifts 16,449 14,500 Insurance 35,154 32,809 Loss on property, plant and equipment written off 24,398 Licence fees 44,704 46,377 Meeting expenses 170, ,212 Postage and stamp duties 158, ,261 Printing and stationery 297, ,383 Professional fees 58,986 32,600 Professional Services Development Assistance Scheme 139,991 Property expenses note 20 49,348 47,562 Repairs and renewals 165,414 86,128 Salaries and allowances 6,065,242 5,784,669 Social expenses 33,172 49,976 Staff lunch 57,600 57,600 Subscriptions to other medical associations 40,587 30,426 Sundry expenses 154,931 60,022 Telephone and telegrams 12,312 11,406 Travelling expenses 27,178 29,211 Water and electricity 92,512 90,885 9,995,483 9,419, DEFICIT FROM OTHER FUNCTIONS Fees and donations received 394, ,095 Less: Expenditure (823,338) (592,408) (428,799) (395,313) 20. PROPERTY EXPENSES Management fee 3,817 Rates and government rent 4,491 6,522 Repairs and maintenance 41,040 41,040 49,348 47,562 19

22 21. SURPLUS ON HKMA NEWSLETTER Advertising income 1,307,715 1,119,524 Less: Expenditure (1,002,345) (938,482) 305, , COUNCIL MEMBERS REMUNERATION Nil (2008: Nil). 23. TAXATION i) Income tax expense in the income and expenditure account represents: Current year Hong Kong profi ts tax liability 104, ,378 Over-provision in prior year (24,999) 79, ,378 Provision for Hong Kong profi ts tax has been made at the rate of 16.5% (2008: 17.5%) on the estimated assessable profi ts for the year. ii) The income tax expense for the year can be reconciled to the surplus before taxation per the income and expenditure account as follows: Surplus before taxation 1,704,293 3,667,196 Tax calculated at normal income tax rate of 16.5% (2008: 17.5%) 281, ,759 Net overprovision of Hong Kong profi ts tax in prior years and current year (34,909) Tax effect on non-taxable income (245,137) (408,224) Tax effect on non-deductible expenses 5,511 1,750 Tax effect on temporary differences not recognised 72,815 66,615 Tax effect on income/expenses on other fund (210) 2,478 Income tax expense 79, ,378 iii) iv) Tax recoverable in the balance sheet represents the excess of the Hong Kong provisional profi ts tax paid over the estimated tax liability for the year ended 28th February, Provision for deferred tax has not been provided in the fi nancial statements as the effect of all temporary differences is not material. 20

23 24. FUNDS Public Medical Education New Investment Special Permanent Foundation HKMA China Premises Revaluation General Fund Fund Premises Fund Fund Relief Fund Fund Reserve Total At ,555,860 11,481,914 4,224, , ,869 6,281,573 8,492,152 45,474,634 Net surplus for the year 5,839,678 5,839,678 Transfer to special fund (note) (5,839,678) 5,839,678 Transfer to income and expenditure account for subscription receivable waived for 2007/08 (note) (2,476,860) (2,476,860) Revaluation defi cit for the year (1,286,812) (1,286,812) Release upon disposal (46,305) (46,305) Interest income 10,351 3,808 14,159 At ,555,860 14,844,732 4,224, , ,677 6,281,573 7,159,035 47,518,494 At ,555,860 14,844,732 4,224, , ,677 6,281,573 7,159,035 47,518,494 Net surplus for the year 4,254,514 4,254,514 Transfer to special fund (note) (4,254,514) 4,254,514 Transfer to income and expenditure account for subscription receivable waived for 2008/09 (note) (2,629,500) (2,629,500) Revaluation defi cit for the year (6,135,755) (6,135,755) Donation (70,000) (70,000) Interest income ,275 Expense on Healthy 8000 steps (77,184) (77,184) At ,555,860 16,469,746 4,224, ,607 63,125 6,281,573 1,023,280 42,861,844 Note: According to a Special Resolution passed on 21st July, 2005, it was resolved that the annual surplus of the Association be transferred to a special account and that when the balance of this special account is suffi cient to offset the subscriptions receivable for the following year, an amount equivalent to the subscriptions receivable in that year be transferred from this account to the Annual Subscription account of the relevant year. The amount of 4,254,514 (2008: 5,839,678) which is included in general fund transferred to special fund and represents as follows: Annual surplus transferred: Net surplus for the year ended 28th February, ,254, OPERATING LEASE ARRANGEMENT The Association leases its investment property under operating lease arrangement. At the balance sheet date, the Association had total future minimum lease rental receivable under non-cancellable operating lease falling due as follows: not later than one year 25,000 later than one year and not later than fi ve years 25,000 21

24 26. FINANCIAL INSTRUMENTS Financial assets of the Association include utility and other deposits, sundry receivables and prepayments, amounts due from related companies and cash and bank balances. Financial liabilities of the Association include sundry payables and accruals and amounts due to related companies. The main risk arising from the Association s fi nancial instruments are interest rate risk and credit risk and liquidity risk. The Council members reviews and agrees policies for managing each of these risks and they are summarised below: a) Financial risk factors: 1) Foreign currency risk The Association has no signifi cant exposure to foreign currency risk as substantially all of the Association s transactions are denominated in Hong Kong dollars. 2) Interest rate risk There are two types of interest rate risk: Fair value interest rate risk the risk that the value of a fi nancial instrument will fl uctuate because of changes in market interest rates; and Cash fl ow interest rate risk the risk that the future cash fl ows of a fi nancial instrument will fl uctuate because of changes in market interest rates. The Association is exposed to cash fl ow interest rate risk as the Association has interest-bearing bank balances and time deposits. Floating rate: Bank balances 8,304,478 19,228,761 Time deposits with banks 33,448,103 10,472,905 The other fi nancial instruments of the Association that are not included in the above are non-interest bearing. Sensitivity analysis At 28th February, 2009, it is estimated that a general increase/decrease of 100 basis points in interest rates, with all other variables held constant, would increase/decrease the Association s surplus after taxation and general fund by approximately 417,526 (2008: 401,902). Other components of funds would increase/decrease by approximately 417, : 401,902) in response to the general increase/decrease in interest rates. The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the balance sheet date and had been applied to the exposure to interest rate risk for both derivative and non-derivative fi nancial instruments in existence at that date. The 100 basis point increase or decrease represents management s assessment of a reasonably possible change in interest rates over the period until the next annual balance sheet date. The analysis is performed on the same basis for

25 26. FINANCIAL INSTRUMENTS (continued) a) Financial risk factors: (continued) 3) Credit risk The Association s maximum exposure to credit risks in the event of the counterparties failure to perform their obligations as at 28th February, 2009 in relation to each class of recognised fi nancial assets is the carrying amount of those assets as stated in the balance sheet. As at 28th February, 2009 and 29th February, 2008, the fi nancial assets of the Association that were exposed to credit risk and their maximum exposure were as follows: Carrying Maximum Carrying Maximum amount in exposure amount in exposure balance sheet to credit risk balance sheet to credit risk Financial assets Utility and other deposits 98,962 98,962 95,861 95,861 Sundry receivables and prepayments 375, , , ,483 Amounts due from related companies 97,382 97,382 Cash and bank balances 41,808,669 41,808,669 40,200,569 40,200,569 42,283,033 42,283,033 41,108,295 41,108,295 4) Liquidity risk The Association s policy is to regularly monitor its liquidity requirements to ensure that it maintains suffi cient reserve of cash to meet its liquidity requirements in the short and longer terms. The following table details the remaining contractual maturities at the balance sheet date of the Association s fi nancial liabilities, which are based on contractual undiscounted cash fl ows and the earliest date the Association can be required to pay: 2009 Total contractual Within Carrying undiscounted 1 year or amount cash flow on demand Current liabilities Sundry payables and accruals 20,589,269 (20,589,269) (20,589,269) Amounts due to related companies 116,124 (116,124) (116,124) 20,705,393 (20,705,393) (20,705,393) 2008 Total contractual Within Carrying undiscounted 1 year or amount cash fl ow on demand Current liabilities Sundry payables and accruals 20,113,530 (20,113,530) (20,113,530) 23

26 26. FINANCIAL INSTRUMENTS (continued) a) Financial risk factors: (continued) 5) Price risk The Association is exposed to equity security price risk on available-for-sale fi nancial assets. The fair value adjustment will be affected either positively or negatively, amongst others, by the changes in stock price. The company s equity price risk is mainly concentrated on equity instruments quoted in the Stock Exchange in Hong Kong. The management manages the exposure to price risk by maintaining a portfolio of investments with different risk and return profi les. Sensitivity analysis The sensitivity analyses below have been determined based on the exposure to equity price risks at the reporting date. The following denominates the sensitivity to every 5% change in the fair values of listed equity securities classifi ed as available-for-sale fi nancial assets with all other variable held constant and before any impact on tax, based on their carrying amounts at the balance sheet date. Investment Revaluation Reserve of the Association for the year would increase/decrease by 453,865 (2008: 698,801). b) Fair value estimation: The carrying amounts of the Association s fi nancial assets and fi nancial liabilities approximate to their fair values due to their short term maturity. 27. FUND MANAGEMENT The Association s objectives when managing fund are: To safeguard the Association s ability to continue as a going concern, so that it continues to provide benefi t for members; To support the Association s stability and growth; and To provide fund for the purpose of strengthening the Association s risk management capability. The Association actively and regularly reviews and manages its fund structure to ensure optimal fund structure, taking into consideration the future fund requirements of the Association and prevailing and projected profi tability and projected operating cash fl ows. Details of movements in funds are set out in note (24) on the fi nancial statements. 28. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECT FOR THE YEAR ENDED 28TH FEBRUARY, 2009 Up to the date of issue of these fi nancial statements, the Hong Kong Institution of Certifi ed Public Accountants has issued a number of amendments, new standards and interpretations which are not yet effective for the year ended 28th February, 2009 and which have not been adopted in these fi nancial statements. The Association is in the process of making an assessment of what the impact of these amendments, new standards and new interpretations is expected to be in the period of initial application. So far it has concluded that the adoption of them is unlikely to have a signifi cant impact on the Association s results of operations and fi nancial position. 29. COMPARATIVE FIGURES Certain comparative fi gures in respect of the cash fl ow statement have been reclassifi ed to conform with the current year s presentation. 24

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